1. The facts which led up to this appeal are the following : One Madar Sahib executed two mortgages to Thangammal, one for Rs. 2,000 in 1921 and the other for Rs. 1,000 in 1922. In 1926 Thangammal purchased certain properties from one Ramanatha Aiyar for Rs. 20,000 and by way of making up part of the sale price she assigned to her vendor her rights under the two mortgages from Madar Sahib, the value thereof being estimated at the time as Rs. 5,290. In 1931 Ramanatha Aiyar assigned his rights under these mortgages to the plaintiff who is the appellant here. In 1935 the plaintiff brought a suit claiming as against defendants 1 to 6 (the heirs of Madar Sahib) a decree on these two mortgages and as against defendants 7 to 9 (the heirs of Thangammal) a decree on the basis of the covenants of title contained in the deeds, of assignment. The trial Court found that Madar Sahib had no title to the lands mortgaged and dismissed the suit on the mortgage documents as against his heirs. He gave a decree against defendants 7 to 9 for Rs. 5,290 with interest on the basis that they were liable for damages for the breach of the covenant of title. After Madras Act IV of 1938 came into force, the 9th defendant filed an application under Section 19 to scale down this decree and the learned Subordinate Judge of Coimbatore has scaled down the decree with reference to the original principal of the two mortgages allowing only Rs. 3,000 with interest at 6 1/4 per cent. from 1st October, 1937. He repelled the contention that the liability was exempt under Section 10 (2) of the Act.
2. It seems to us that the learned Subordinate Judge has mis-understood the nature of the transaction. Thangammal was never liable under these mortgages. She was the mortgagee and not the mortgagor. Her liability to the plaintiff is the liability of a vendee who instead of cash hands over a commodity as part of the purchase price, guaranteeing that the commodity will fetch the amount at which it is valued. When eventually that commodity is found to be worthless, an action lies against the vendee for the breach of the covenant regarding its value. The mortgages which Thangammal assigned were mere securities made over in lieu of cash with a guarantee as to the amount which they would fetch. The decree of the lower Court finally decided these securities to be worthless and declared Thangammal's heirs liable to pay the amount which they should have realised. It seems, therefore, to follow that there can be no question of scaling down this liability with reference to the principal of the mortgage debts for which Thangammal herself was never liable. The appellant is satisfied with a decree for Rs. 5,290 the amount at which the securities were valued, with interest thereon at 6 per cent. from 1st October, 1937 to the date of the lower Court's order and costs. Subsequent interest will be at 6 per cent.
3. In these circumstances it is unnecessary to go into the further question whether the appellant is entitled to the protection of Section 10 (2) of the Act. The appeal is allowed with proportionate costs on the application and on the appeal and the decree of the lower Court will be amended as indicated above.